No recession in ’09—ADB

The Asian Development Bank yesterday said the Philippines is not going to experience economic recession this year because of the continuing growth in remittances and improving business confidence.

ADB’s forecast contradicted the 0.5-percent contraction in the gross domestic product predicted by the World Bank and the 1-percent decline projected by the International Monetary Fund.

“We remain positive on the prospects for the Philippines. On balance, the Philippine economy is expected to maintain a positive gross domestic product growth in 2009,” ADB country director Neeraj Jain told reporters in a news briefing at the bank’s headquarters in Ortigas, Mandaluyong City yesterday.

The ADB in March said the Philippine economy was likely to grow 2.5 percent this year, but Jain said the bank would revise the forecast downward but not to a level below zero.

Jain cited continuing remittance growth, recent improvement in business confidence and turnaround in key exports as among the positive signals in the economy. He said the positive impact of fiscal and monetary policies on the economy would also take time to fully play out.

The country’s GDP expanded by just 0.4 percent in the first quarter, prompting the government to lower its growth forecast to about 0.8 to 1.8 percent this year.

Jain said the growth forecasts made by 13 institutions and analysts pointed to an average growth of 1.3 percent for the Philippines this year, or within the government’s own estimate.

The World Bank yesterday also released its assessment of the Philippine economy, which it expects to contract 0.5 percent this year, before rebounding with a 2.4- percent growth in 2010 and 4.0 percent in 2011.

“Output is projected to contract in 2009 despite the ongoing and projected policy actions. The large fiscal easing and sharp cut in central bank rates are helping to buffer the Philippines’ economy from the challenging environment both domestically and from outside,” the World Bank said in its July report.

“A modest recovery is expected for 2010 as both fiscal and monetary policies are expected to become slightly less expansionary than in 2009.”

The ADB and the World Bank cited global developments and weakening government revenues as downside risks to economy growth in the Philippines. –Roderick T. dela Cruz, Manila Standard Today